Wednesday, October 17, 2007

Market Outlook RUT for Oct 17th '07

Dominant TF: Daily & Weekly
Swings: DN-UP-UP
Market direction: congestion to down initially. Overall trend is still up, but support must be found first.

60mins: Congestion to down, but probably at a slow pace.

It is interesting to see that the 828 pivot level may turn soon into a resistance level. AdStoK and Entropy certainly point lower, so we should maybe look for a lower support level, 820 first, but much stronger at 813.

Daily: Congestion to down at first. Overall direction unchanged yet but new support will have to be found.
No new information:
AdStoK is weaker and lines are crossing, indicating a definite slowdown. The red bar confirms also the diagnostic. We could certainly look for support between 808 (Fib) and 812 (MM) in the next few days.
The high volatility environment seems to accelerate movements in either direction, however Entropy is still fairly high so this down move should be fairly controlled. No reason just yet to believe it will go lower than those levels unless some economic news shock the system of course.

Weekly: mildly up until...
It was clear RUT would hit 851 (highs + Fib) but what is now coming next? AdStoK and Entropy do not point lower, so one should not panic just yet. RUT is likely to hold or even possibly go higher. Strong MM resistance is still 875.

Market Outlook SPY for Oct 17th '07

Dominant TF: Daily (and 15mins)
Swings: DN-DN-UP
Market direction: Congestion. Upward bias still valid overall despite some profit taking.

60mins: Congestion to mildly down.

Erosion of SPY should continue, until support is truly found, first at 153.13, but possibly lower. Since the gradient is moderate, 153 is indeed more likely than 150 which seems much stronger though.

Daily: Profit taking until support is found.

AdStoK is so overbought with a white line declining, bars turning red, but Entropy is still holding fairly well. This is not indicative of any strong retracement in the near term, so profit taking should continue at a slow pace, possibly to 150 which would be tested for support and is a Fib PR1 level.

Weekly: mildly UP.
The Swing indicator is up, but the key swing price level is still close at this time frame, so the indicator could turn around again. For the time being, everything points upward. We can however see some divergence in AdStoK and a very low significance level at this time frame, so this is only background information at the moment, and one should focus on lower time frames (15mins and daily).

Market Outlook NDX for Oct 17th '07

Dominant TF: Daily and low time frames (15mins)
Swings: DN-UP-UP
Market direction: Congestion but upward bias still valid (Daily).

Note: A variation to the AdStoK white line is plotted (test). It provide a slightly higher memory effect in the indicator.

60mins: Congestion with a down bias.
No new information yesterday. The same trading range is expected.

Levels to watch: around 2120 (Fib at 2117 and MM at 2125). 2156 is pivot in lower time frames.

Daily: Congestion - Upward bias is still technically there but NDX is very overbought, so lower time frames must be watched carefully.
No new information:
AdStoK and Entropy are now showing some early signs of weakness, the bar has turned red and significance level is still the highest of all 3 on this chart.
There is however so much accumulated energy (in Entropy) that one cannot imagine a serious retracement right now, but one could certainly have a pause with some congestion and profit taking. This high volatility environment can also obviously accelerate movements in either direction, but that would take a few days to materialize.
Note: the new AdStoK White Line variation is higher, hence down-plays the effect of the current profit taking event.

Weekly: Mildly UP until resistance is found
Current congestion in lower time frames can slow down or stall the upward bias we still have.
Note that significance level on this time frame is falling, due to indicator divergence.